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Monday, June 4, 2012

July SPY Bull Put Spread

Demo-trading:
SELL 15 SPY July 118 Put (@1.73)
BUY 15 SPY July 116 Put (@1.41)

Credit: $0.32 (0.32 * 100 * 15 = $480)
Margin: $1.68 (1.68 * 100 * 15 = $2520)

Break-even point(s): 117.68 (Currently at 128.10, SPY would need to go down over 8% by July expiration)
Probability of success: 81.55%
Days to expiration: 46
Max return on margin: 19.05%
Commissions: $45.00 (Assuming $1.50 per contract)

Order execution:
(Click on image to enlarge)

Profit picture:
(Click on Image to enlarge)

 Although, we are in a downtrend, this position feels comfortable to me. SPY 117.68 looks far enough (although anything can happen). The elevated volatility has inflated PUT options values, so I can sell farther out of the money options. We'll see how it plays out. 46 days now to baby sit this one.

Check out demo-record

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Weekend Portfolio Analysis (07-08-2012)
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